July 20, 2015

July 13, 2015

Health care provider organizations that are working directly with employers like Boeing — and cutting out the insurance company middlemen — believe they can do more than save money for those employers. They’re confident they can also improve both health care quality and service for workers and their families in ways that insurance companies cannot.

Employers are starting to realize that insurers might not be, as they have claimed, “part of the solution” to achieving a more patient-centered health care system. In fact, in some ways they have been part of the problem.

Providence-Swedish Health Alliance, a not-for-profit, hospital-based accountable care organization (ACO), will soon be providing both coverage and care to many Boeing employees, along with UW (University of Washington) Medicine — without an insurance firm. Officials at Providence-Swedish told me Boeing chose to work with them directly in part because of the firm’s desire to ensure their employees had a “better patient experience.” While cutting costs and improving quality of care were priorities, improving service and reducing hassles that have become synonymous with insurance company interactions was equally important to Boeing.

So Providence-Swedish has committed to a number of assurances and is even establishing a “concierge center” for Boeing employees. Among other things, the ACO has promised same-day or next-day appointments for urgent primary care visits and acute care, proactive support for preventive care and chronic disease management. The hub for all of this will be the concierge center, which patients can reach by phone, email or the Web.

While Boeing is contracting directly with Providence-Swedish and UW Medicine, the ACOs will have their own deals with insurance companies to provide back room services like claims processing. Dr. Joe Gifford, CEO of the Providence-Swedish ACO, told me his organization is working with Blue Cross of Illinois for that work. The federal government works with insurers in the same way to handle claims for Medicare beneficiaries.

Gifford also told me he’s in discussions with a number of other employers in the region that could result in similar deals—and even some that will include insurance companies, to some extent. And he noted that government entities, including Medicare and state governments, are following a similar path.

It’s a path that leads to what is often referred to as value-based care, a term that encompasses a spectrum of arrangements. What is common to all of the arrangements is a movement away from paying doctors and hospitals for individual treatments and diagnostic tests. In the deal with Boeing, for example, the aerospace company has given the ACOs a budget to provide all the care Boeing employees and dependents are likely to need in 2015.

In that sense, he said, “Boeing is treating us like an industrial supplier … and we are fully accountable” for costs and outcomes. That means that the ACOs will by necessity need to focus on keeping patients healthy and managing chronic conditions in the most cost-effective ways so as to prevent complications and reduce unnecessary hospitalizations.

Other hospitals are also taking on responsibilities that once were the complete domain of insurance companies. One example: the Community Hospital of the Monterey Peninsula in California, which earlier this year began offering its own Medicare Advantage plan to serve area seniors through a subsidiary called Aspire. “We think we can do a better job of meeting local needs than having a national company come in and tell us how to do it,” the company’s CEO, Scott Kelly, told the Monterey County Weekly.

This trend is not new. Many hospitals in the 1980s began operating their own HMOs to compete with insurance companies, but most of them failed, in large part because they didn’t have the actuarial and claims management expertise in-house they needed to stay solvent.

Learning from past mistakes, many of the hospitals and physician-led groups that are moving back into the health insurance market are hiring companies like Chicago-based Valence Health, a fast-growing firm that offers services ranging from claims adjudication to patient care coordination to more than 120 hospitals nationwide.

The number of employees at Valence has doubled to 325 over the past two years and is expected to grow by another 500 within five years. According to Kevin Weinstein, Valence’s chief marketing officer, that growth has been fueled by the movement away from fee-for-service medicine to value-based care in which health care providers are finding they have no alternative but to be more accountable for both cost and quality.

While the Affordable Care Act has been a catalyst for much of this change, employers like Boeing and other big payers of health care, including federal and state governments, will continue to drive it.

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